EXCO Resources, Inc. (NYSE: XCO) (“EXCO”) today announced fourth quarter and full year operating and financial results for 2012.
- Adjusted net income, a non-GAAP measure adjusting for non-cash gains and losses from derivative financial instruments (derivatives), non-cash ceiling test write-downs and items typically not included by securities analysts in published estimates, was $0.17 per diluted share for the fourth quarter 2012 compared to $0.09 per diluted share for the fourth quarter 2011. Adjusted net income for the full year 2012 was $0.38 per diluted share compared to $0.56 per diluted share for the full year 2011.
- GAAP results were a net loss of $269 million, or $1.25 per diluted share, for the fourth quarter 2012 and a net loss of $1.4 billion, or $6.50 per diluted share, for the full year 2012. The fourth quarter and full year 2012 include a $324 million and $1.3 billion, respectively, pre-tax non-cash ceiling test write-down of oil and natural gas properties.
- Oil, natural gas and natural gas liquids (NGL) revenues, before cash settlements on derivatives, for the fourth quarter 2012 were $152 million compared with fourth quarter 2011 revenues of $179 million. Our average sales price per Mcfe decreased to $3.47 per Mcfe for the fourth quarter 2012 from $3.49 in the prior year's quarter. When the impacts of cash settlements from derivatives are considered, oil, natural gas and NGL revenues were $192 million for the fourth quarter 2012, compared with $231 million in the fourth quarter 2011. Oil, natural gas and NGL revenues for the full year 2012, excluding derivatives, were $547 million and $749 million when settlements from derivatives are included. Revenues for the full year 2011 were $754 million, excluding derivatives, and $890 million inclusive of cash settlements from derivatives.
- Adjusted earnings before interest, taxes, depreciation, depletion and amortization, ceiling test write-downs and other non-cash income and expense items (adjusted EBITDA, a non-GAAP measure) for the fourth quarter 2012 was $122 million compared with $151 million in the prior year's quarter and $468 million for the full year 2012 compared with $605 million for the full year 2011.
- Oil, natural gas and NGL production was 44 Bcfe, or 477 Mmcfe per day, for the fourth quarter 2012 compared with 512 Mmcfe per day in the third quarter 2012 and 556 Mmcfe per day in the fourth quarter 2011. The declines in production reflect the impacts of our reduced drilling program. At the end of 2011, we had 24 operated drilling rigs throughout our operating regions. During 2012, we reduced that operated rig count to five. Fourth quarter 2012 production from our Haynesville/Bossier shale was 334 Mmcf per day compared with 407 Mmcf per day in the prior year's quarter. Year over year production increased 5% in our Haynesville/Bossier shale area. Fourth quarter 2012 production in our Appalachia region was 50 Mmcfe per day, a 22% increase from fourth quarter 2011. Year over year production increased 30% in our Appalachia region. The increase reflects impacts from our horizontal drilling of Marcellus shale wells. Permian production was flat year over year and compared to prior quarters.
- Our direct operating costs were $0.41 per Mcfe for the fourth quarter 2012 compared with $0.47 per Mcfe for the fourth quarter 2011. We continue taking significant steps in reducing our operating costs in all operating areas in response to the low natural gas price environment. Specific actions implemented during 2012 include shutting in certain marginal producing wells, reducing compressor rentals, renegotiating water disposal arrangements and modifying chemical treatment programs.
- TGGT’s average throughput was approximately 1.4 Bcf per day during the fourth quarter 2012, compared with 1.5 Bcf per day during the fourth quarter 2011. Our 50% share of TGGT’s adjusted net income in the fourth quarter 2012 was $13 million, after adjustments for certain non-cash items during the quarter, compared to $10 million during the fourth quarter 2011.
- On February 14, 2013, we formed a partnership with Harbinger Group Inc. (HGI). Pursuant to the definitive agreements governing the transaction, we contributed our conventional non-shale assets in East Texas and North Louisiana and our shallow Canyon Sand and other assets in the Permian Basin in West Texas to the partnership in exchange for cash consideration of $573 million, after customary preliminary purchase price adjustments, a 24.5% limited partner interest and a 50% interest in the general partner of the partnership. After giving effect to the 2.0% general partner interest in the partnership, we own an economic interest of 25.5% in the partnership. Proceeds received from the formation of the partnership were used to reduce outstanding borrowings under our credit agreement. The partnership has its own credit facility with an initial borrowing base of $400 million to fund its operations and seek accretive acquisitions. Following are selected operating data and financial metrics for 2012 reflecting the pro forma impacts to EXCO for the full year 2012 from the formation of the partnership with HGI:
|Pro forma adjustments|
|(dollars in thousands, except per unit rate)||Historical EXCO||Total Partnership||EXCO's 25.5% share||Pro forma EXCO|
|Reserves (as of December 31, 2012):|
|Total proved (Mmcfe)||1,009,386||(404,789||)||103,221||707,818|
|Total production (Mmcfe)||189,928||(36,647||)||9,345||162,626|
|Average production (Mmcfe/d)||519||(100||)||26||445|
|Revenues, excluding derivatives||$||546,609||$||(159,447||)||$||40,659||$||427,821|
|Average realized price ($/Mcfe)||2.88||4.35||4.35||2.63|
|Direct operating costs||77,127||(46,824||)||11,940||42,243|
|Production and ad valorem taxes||27,483||(18,956||)||4,834||13,361|
|Gathering and transportation||102,875||(12,841||)||3,275||93,309|
|Excess of revenues over operating expenses||$||339,124||$||(80,826||)||$||20,610||$||278,908|
Douglas H. Miller, EXCO’s Chief Executive Officer, commented, "We recognized that 2012 would be a difficult year in terms of natural gas prices so we undertook actions to position ourselves to meet the challenges low prices present. We reduced our drilling rig count from 24 rigs at year-end 2011 to five at the end of 2012. We reduced our employee headcount by 16% and our contractor headcount by 62%. We took other aggressive cost cutting measures as well, reducing our capital spending by 48%, our direct operating expenses by 11% on a per Mcfe basis, and our general and administrative costs by 23% on a per Mcfe basis, year over year. In spite of the decreased drilling and spending, our production increased 3% year over year.